South Africa is hosting the Commonwealth Games in 2022, but can it afford it?

Business of Sport
Quartz africa
Business of Sport
Quartz africa

Just five years after hosting the 2010 Fifa World Cup, South Africa has clinched the rights to host another mega-event: the 2022 Commonwealth Games.

South Africa will be the first African nation to host the Commonwealth Games, 85 years since the Games were first held in Canada. The roots of the Commonwealth Games are tied to the United Kingdom’s history of colonial rule across the five continents. Although 53 countries currently belong to the Commonwealth, 71 teams participate in the Games, 18 of which are African.

South Africa’s win isn’t all that convincing. It was the only country to bid for the Games after the Canadian city of Edmonton pulled out in February this year, citing falling oil prices and the need to focus on social spending priorities (a challenge with which South Africa is very familiar).

The 2022 Commonwealth Games will be held in the coastal city of Durban, and is expected to cost South Africa a total of $483 million. Durban itself will fork out R1.2 billion ($88,5 million), while the remainder will be covered by contributions from the South African Sports Olympic Committee (Sascoc), and from provincial and national funds.

The cost of hosting the games will be somewhat bitter-sweet for South Africa, which is facing tough economic times.

Earlier this year, the country’s national treasury department acknowledged that it was spending more money than it has, and that low economic growth in the medium term meant the country needed to take active steps to reduce its budget deficit, and focus on core social and economic priorities.

“We’ve been here before”

Mega-events like the Commonwealth Games are often vaunted for delivering an increase in employment and revenue, particularly in the retail, tourism and construction sectors.

Global tax and advisory firm Grant Thornton has measured the economic impact of South Africa’s hosting of the 2010 Fifa Soccer World Cup. The firm found for a total expenditure of R40 billion, South Africa garnered 350,000 foreign visitors, who only spent a combined R8 billion.

In the end, the total economic benefits gained from the World Cup, according to Grant Thornton, was around R 18 billion.

But Professor Patrick Bond, a political economist who heads up the UKZN Centre for Civil Society, a Durban-based research institute which researches on socio-economic issues, argues the economic benefits expected from mega-events are often overstated. In a chapter of a 2011 book, titled South Africa’s World Cup: A Legacy for Whom?, Bond analyzes the 2010 World Cup and argues:

“There is an assumption that because there is an increase in direct expenditure due to hosting the event, additional workers will be employed. While this may be true for the construction sector it may not be the same for the tourism and retail sectors.

Because the World Cup is a short event, employers in the latter case will rather increase the number of hours worked because of underemployment and at best hire a few short-term employees, while the rapid expansion of construction may increase employment opportunities.”

This time around, South Africa hopes that the 2022 Commonwealth Games will add an additional R11 billion in GDP growth, according to a statement released on Sept. 2 from the Ministry of Sports and Recreation. Whether this will come to fruition remains to be seen.

For now, one reassurance is that South Africa will not be spending nearly as much on new stadiums, as it did in 2010. Durban is planning to renovate and re-use the Moses Mabidha stadium, which was built for the 2010 Fifa World Cup.

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